Unions Claim Wages Are Lower In Right-To-Work States. But, Are They?

One of the common refrains among ardent union supporters is that wages are lower in so-called Right-to-Work states. But, if so, why are wages higher in all these Right-to-Work states?

While this is often misunderstood by many, the only difference between a state with Right-to-Work laws and a state without Right-to-Wok laws is simple: In states without Right-to-Work laws, employees who work for unionized employers can be fired for refusing to pay union fees. In Right-to-Work states, employees cannot be fired for not paying union fees.

Texas is a Right-to-Work state, yet Texas’ wages are higher than Alaska, Delaware, Hawaii, Maine, Missouri, Montana, New Hampshire, New Mexico, Ohio, Oregon, Pennsylvania, Rhode Island, and Vermont—all of which are not Right-to-Work states.

Virginia is a Right-to-Work state, yet Virginia’s wages are higher than Alaska, Delaware, Hawaii, Maine, Missouri, Montana, New Hampshire, New Mexico, Ohio, Oregon, Pennsylvania, Rhode Island, and Vermont—all of which are not Right-to-Work states.

Arizona, Georgia, Michigan, North Carolina, North Dakota and Tennessee—all of which are Right-to-Work states have higher wages than Maine, Missouri, Montana, New Mexico, Ohio, and Vermont—all of which are not Right-to-Work states.

By unions using states without Right-to-Work laws like California, New York, New Jersey and others to claim that wages are higher than Right-to-Work states is overly simplistic when viewing private-sector wage data.

Annual private industry wages per employee in the United States in 2017, by state (in U.S. dollars) Source: Statista

For starters, in those states (including the District of Columbia) that unions cite as having higher wages due to a lack of Right-to-Work laws, wage averages used almost always include governement workers.

As government workers are funded by taxpayers, in many of the “higher wage” states that unions cite, the tax burden and cost of living is also higher.

Union adherents claim, however, that the growth of jobs (and income) in Right-to-Work states is due to a variety of other factors, like the advent of air conditioning, better roads and desegregation in the South, as well as “massive federal investments in these states’ education systems.”

However, that argument begins to fall apart if one were to look at New Mexico, which is a state without Right-to-Work laws that is sandwiched between two Right-to-Work states–Arizona and Texas.

Despite having similar climates its neighbors on either side, New Mexico has lagged substantially behind Arizona and Texas both jobs and wealth. Why?

As was noted in the New York Times just a few years ago, “even after correcting for population growth, income per person on average rose somewhat more in the right to work jurisdictions.”

Capital moves to right-to-work states with a more stable labor environment, and that increases labor demand and, ultimately, income and wages.

Of course, there are many factors besides right-to-work laws that influence economic growth. For example, the tax climate, educational attainment and the changing role of manufacturing are sometimes important. Therefore, multivariate statistical procedures are needed to see if in fact right-to-work laws matter. Analysis incorporating several of these other variables shows that they do: The presence of right-to-work laws are associated with greater growth.

Regardless how one personally views the issue of Right-to-Work laws, to state that wages are lower in states with Right-to-Work laws is an over-simplification of the issue (at best) and, just as likely, disingenuous.

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